As Claremont begins to consider its budget for the next two-year fiscal cycle, several factors may force the city to tighten its belt.

While economists forecast the possibility of a recession due to declining housing and retail markets, consumer frugality has a direct impact on Claremont’s financial wellbeing.

The city gets roughly 57 percent of its revenue from auto sales. Claremont Ford, one of 3 auto dealerships in the city, recently closed shop. Claremont Toyota also had declining sales in 2007, City Manager Jeff Parker said, and projections for the coming year are not looking good.

“That’s my biggest worry,” Mr. Parker said. “If the economy gets real bad, people just stop buying and the sales tax goes down. That could be a problem with auto sales and the success of the Village Expansion.”

The housing market is also a big concern for Claremont. Several major housing developments are on hold until developers feel comfortable that demand will once again increase for the type of housing they are offering. Until the projects move forward again, income from property sales tax can not be relied upon in the current budget cycle.

"We are going to have to look at the overall picture, do some prioritizing and have some contingencies in case we do have some problems." Councilmember Corey Calaycay

Another factor was the loss of a $1 million state grant for the purchase of Johnson’s Pasture, which forced the city to tap into the general reserve fund. That money could have been used to fund other activities in the city, such as the construction of Padua Park.

“That’s where the impact came in,” Mr. Parker said. “Not getting the extra million probably impacted us in our ability to have a dialogue on other projects.”

As California deals with a $13 billion budget deficit, legislators are considering trimming services and grant money to municipalities across the state. Even money protected under Proposition 1A is not completely safe, as state legislator are capable of overturning the measure with a two-thirds majority vote.

“We are going to have to look at the overall picture, do some prioritizing and have some contingencies in case we do have some problems,” councilmember Corey Calaycay said.

Despite the warnings, Mr. Parker said he expects city revenue to be about the same as in the previous fiscal cycle. He cited the success of hotels in the city and new businesses as reliable replacement revenue sources.

Budget discussions kicked off on Thursday night at a meeting attended by city staff, commissioners and council members. The purpose of the meeting was to identify projects of interest and where the city needs improvements, rather than just crunching numbers.

During the previous budget cycle, from 2006 to 2008, Claremont had an operating budget of $38,975,178. The city’s expenditures were $38,038,012.

Several more meetings on the budget are planned for the months to come. Residents can give their input on what they feel are important considerations for the city when allocating money to various projects and services.

The first community budget workshop will be held on Thursday, January 24 at 7 p.m. at the Alexander Hughes Community Center. Another will follow on Thursday, January 31 at 7 p.m. at the Blaisdell Center.

The final council discussion on the budget will take place sometime in June. The fiscal year begins on July 1, 2008.

 

— Tony Krickl